Broadcast Network Upfront to End Down 22 Percent


Broadcast network television upfront buying for the 2009-10 season is expected to wrap up this week with the five major broadcast networks taking in about $7.2 billion in prime time ad revenue, down 22 percent over last year’s $9.25 billion.

While the troubled economy played a role in the decline of upfront revenue, with some advertiser budgets lower than last year, and negotiated pricing for ad units down -1 to -7 percent compared to last year, the biggest reason for the disparity was that the networks decided to hold back significantly more ad inventory, hoping to sell it during the season in hopes that the economy gets healthier.

ABC and CBS, which both sold about $2.5 billion in prime-time advertising in last year’s upfront, according to sources familiar with both networks' negotiations, sold about $1.9 billion respectively this year. Fox, which sold $1.95 billion last year, sold about $1.6 billion prime-time revenue this year, while NBC, which recorded $1.9 billion last year, was said by sources to have banked $1.5 billion this year. The CW network, with only five days and 10 hours a week of prime-time programming, sold about $300 million in prime time advertising, compared to $380 million the year before.

NBC’s prime-time total does not include two weeks of  Winter Olympics coverage in February, but does include National Football League Sunday Night Football telecasts in prime time in fourth quarter. And ABC’s total also includes Saturday night college football telecasts.

Upfront negotiations between the network sales executives and the media agencies were the most acrimonious in years, with the agencies demanding secrecy and the networks agreeing to be even more tight-lipped this year.

“Because of the marketplace dynamics, there has been a high degree of secrecy,” said one network executive, who did not want to speak for attribution. In fact, none of the networks would comment on the record or on background on the numbers, which were gleaned from conversations with media buying agency executives and other sources familiar with the negotiations.

But CBS Corp. president and CEO Les Moonves, speaking on the company’s second quarter financial call to analysts and the media, gave some insight as to why the networks held back more inventory this year, rather than sell it in the upfront at much lower prices than last year.

Moonves said in CBS’ case, the network’s third-quarter scatter ad dollars in prime time so far are up 30 percent, or $30 million dollars, with the retail, telecom, fast food and pharmaceutical categories all beginning to spend more. Third quarter, said Moonves, will end up better on ad revenue for the network than second quarter when prime-time advertising was down 4 percent. And he believes fourth quarter will be even stronger.

According to Moonves, CBS sold only about 65 percent of its prime time inventory in the upfront this year. He added that in the 2002 upfront—the last time the network sold as little inventory—it wound up taking in more ad revenue in scatter than it would have if it had had a bigger position in the upfront.

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